What is Cross-Account Hedging?
Cross-account hedging means simultaneously going long and short the same or correlated instruments across multiple accounts — such as MES/ES, MNQ/NQ, or instruments that move together like NQ and ES.
☝️ Simple Example:
Express Funded Account (Account A): Long 5 contracts of ES
Trading Combine (Account B): Short 5 contracts of ES
When positions are hedged across accounts, you're protected from market risk — if the market moves up, Account A profits while Account B loses, and vice versa. The net result is roughly break-even, but a trader can show simulated profits from the winning account while only sacrificing the cost of the Trading Combine or Express Funded Account (XFA).
Why Institutional Hedging Is Different From Cross-Account Hedging
👉 These two things are not the same. The difference matters.
What institutional hedging actually is: A market maker balancing inventory. A firm reducing exposure before a major news event. A hedge fund protecting a long portfolio. The goal is risk management — not risk elimination. A professional tool used for legitimate reasons.
What cross-account hedging looks like at a prop firm: Long in 1 account. Short in another. Directional risk is gone — but so is the point. Instead of trading on skill and conviction, you're offsetting losses, passing the Trading Combine® artificially, or gaming the Payout structure. That's not risk management. That's gaming the system.
Why Topstep prohibits it: The Combine exists to evaluate real Traders — consistency, decision-making, risk management under pressure. Cross-account hedging distorts all of it. One account is set up to lose so the other can win.
Not the same thing. Not even close.
The Simple Version
Institutional hedging → managing real market risk.
Cross-account hedging → manipulating prop firm outcomes.
Hedging itself isn't bad, but using it to pass evaluations or take payouts you haven't earned? That undermines every trader who put in the reps and did it the right way. We protect those traders. That's our job.
The Bottom Line
👉 By maintaining the same standards as professional exchanges, we ensure that:
Success reflects genuine trading skill
All traders compete on a level playing field
You're prepared for the rules you'll face in live markets
Capital is allocated to skilled traders, not loophole exploiters
CME Group Rule 534 states:
"Performing, alone or in concert with any other persons, including between connected accounts, or accounts held with different Parties, trades, or combinations of trades, the purpose of which is to manipulate, abuse, or give User an unfair advantage while using the Site or Services, for example, by engaging in any short term or high-frequency trades or simultaneously entering into opposite positions"
How Topstep Detects Hedging
We use advanced monitoring systems to identify hedging patterns across your accounts. Our systems analyze:
Position Timing: Are opposite positions opened and closed in coordinated patterns?
Position Size: Are positions sized to offset each other's risk?
Duration: How long are opposite positions held simultaneously?
Intent: Does the pattern suggest intentional risk elimination rather than independent trading?
How Enforcement Works
1. First Hedging Attempt — Real-Time Warning
If our system detects that you’ve become hedged across accounts:
You’ll receive a real-time modal notification
You will have a brief window to un-hedge your positions using the options in the modal notification:
If you successfully un-hedge within the time window, you may continue trading
You will receive a follow-up email notification
If You Do Not Un-Hedge
Your hedged positions will be automatically liquidated
Your account will be flagged for hedging behavior
You may continue trading
This first instance serves as a warning and educational step.
2. Repeat Hedging Attempt(s) on the Same Day
If hedging occurs again on the same trading day:
You will have a brief window to un-hedge
If you do not un-hedge in time:
Your hedged positions will be automatically liquidated
You may continue trading
Please note: There will not be a timer shown on this violation. Please un-hedge immediately to continue trading.
3. Next Trading Day — Required Acknowledgement
After the first Hedging attempt, you'll be required to sign an acknowledgement upon login on the next trading day.
A modal notification will appear upon login
You must acknowledge the Terms of Use related to hedging by typing "I agree" in the text box
The modal will include:
Explanation of the hedging policy
Details of when the hedging occurred
Requirement to acknowledge before trading
You will not be able to trade until this acknowledgment is completed.
4. Future Hedging Attempts — Immediate Liquidation
After acknowledgement:
Any future hedging attempt will trigger immediate liquidation:
After liquidation, you may continue trading
You will not be given time to unhedge
5. Excessive Hedging Attempts — Temporary Violation
After excessive hedging attempts:
Your positions will be immediately liquidated
You will not have the opportunity to unhedge
A Temporary Hedging Violation will be issued and you will be prohibited from trading for the remainder of the trading day.
The violation will apply across the hedged accounts
Please note: after numerous warnings, your account may be permanently closed without further notice if you continue to hedge your positions. This action is irreversible. For this reason, it's very important that you review our Hedging Policy and trade responsibly.
Important Notes
Monitoring applies in real-time
Time windows may be adjusted by Risk & Leadership teams
Violations apply across all accounts involved in hedging
This policy applies to the Trading Combine, Express, and Live Accounts
Copy Trading and Technical Errors
Technical glitches and copy trading software can create temporary opposite positions — our system accounts for that. But you're still fully responsible for all activity across your accounts, including anything created by automated systems or third-party tools.
⚠️ If a hedged position meets our criteria (size, duration, intent), enforcement happens. No exceptions.
How to Avoid Hedging Violations
Best Practices
Trade a single account to completely avoid the possibility of hedging
Trade each account independently based on your own analysis
Don't coordinate positions across accounts (or other traders) to offset risk
Monitor copy trading tools to ensure they're not creating opposite positions
Close any accidental hedges immediately if they occur
Contact Support before implementing any strategy you're unsure about
Frequently Asked Questions
Can I trade the same instrument across multiple accounts?
Yes! You can trade the same markets across different accounts. What's prohibited is holding opposite positions simultaneously in a way that eliminates market risk.
What if I disagree with an enforcement decision?
All audit decisions are final. We encourage you to review our trading policies to ensure full compliance moving forward. If you have general questions about the policy itself, we are happy to clarify.
Are hedging attempts tracked at the account level or trader level?
Hedging attempts are tracked at the Trader level. If a Trader received a first-time warning and acknowledged the hedging policy, subsequent hedging activity in any newly purchased account is treated as a post-acknowledgment violation.
Are Practice Accounts included in Hedging Alerts?
No. Practice Accounts are not included in Hedging detection.
Will a hedging warning affect my payout request?
No, warnings alone do not impact your payouts.
Additional Resources
Our commitment: Topstep maintains a fair trading environment where success is based on skill and discipline. We appreciate your commitment to trading with integrity as we prepare you for live markets.